Show Me How tor High-Low Method for a Service Company Boston Railroad decided to

Question

Show Me How tor High-Low Method for a Service Company Boston Railroad decided to use the high-low used by Boston Ralroad is a measure of railroad operating activity,termed gross-ton miles method and operating data from the past six months to estimate th termed "gross-ton miles," which is the total n January February March April May June Determine the variable cost per gross-ton mile and the fixed cost. Variable cost (Round to two decimal places.) Total fixed cost Transportation Costs $557,800 621,900 439,500 596,200 500,100 641,100 Gross-Ton Miles 213,000 238,000 154,000 230,000 185,000 250,000 per gross-ton mile

Explanation / Answer

Variable cost per unit=[Total cost at highest level-Total cost at lowest level]/(Highest level-Lowest level)

=(641100-439500)/(250000-154000)

=$2.1 per gross-ton mile

Total fixed cost=641100-(2.1*250000)=$116100.

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